2019 Louisiana Laws
Revised Statutes
Title 11 - Consolidated Public Retirement
§1632. Retirement eligibility; benefits at three percent
RS 1632 - Retirement eligibility; benefits at three percent
A. Eligibility.
(1) Any member who shall not have received a refund of his accumulated contributions and has ten years of creditable service prior to age fifty-five and has withdrawn from service prior to age fifty-five shall be eligible to retire at age fifty-five.
(2) Any person with membership in the system on or after January 1, 1996, upon or after attainment of age sixty, who shall have completed at least ten years of creditable service, shall be eligible to retire.
(3) Any member who shall withdraw from service upon or after attainment of age fifty-five who shall have completed at least eighteen years of creditable service shall be eligible to retire.
(4) Any member with thirty years of creditable service shall be eligible to retire regardless of age.
B. Benefits.
(1) Normal Retirement. The retirement allowance for members who retire at age sixty-two or above; or for members who retire at age sixty with at least eighteen years of service; or for members who retire at age fifty-five with at least twenty-three years of service; or for members who retire with thirty years of creditable service shall be three percent of the member's average final compensation for each year of creditable service.
(2) Early Retirement. The retirement allowance for members who retire below age fifty-five with less than thirty years of service shall be as set forth in Paragraph B(1) except that the benefits as described in that Paragraph shall be reduced three percent for each year of age below age fifty-five. The retirement allowance for members who retire below age sixty with less than twenty-three years of service shall be as provided in Paragraph B(1) except that the benefits as described in that Paragraph shall be reduced three percent for each year of age below age sixty. The retirement allowance for members who retire below age sixty-two with less than eighteen years of service shall be as set forth in Paragraph B(1) except that the benefits as described in that Paragraph shall be reduced three percent for each year of age below age sixty-two.
C.(1) The annual benefit otherwise payable to a member under the system at any time shall not exceed the maximum permissible benefit. If the benefit the member would otherwise accrue in a limitation year would produce an annual benefit in excess of the maximum permissible benefit, then the benefit shall be limited or the rate of accrual reduced to a benefit that does not exceed the maximum permissible benefit.
(2) The retirement benefit of any member that is not attributable to employee contributions, when expressed as an annual benefit, may not exceed two hundred thousand dollars per year, as adjusted for increases in the cost of living pursuant to 26 U.S.C. 415(d). For purposes of determining whether a member's benefit exceeds this limitation, if the normal form of benefit is other than a single life annuity, such form shall be adjusted actuarially to the equivalent of a single life annuity. This single life annuity shall not exceed the maximum dollar limitation outlined in this Paragraph. No adjustment is required for qualified joint and survivor annuity benefits, preretirement disability benefits, or preretirement death benefits.
(3)(a) If benefit distribution begins before the member has reached age sixty-two, the actual retirement benefit shall not exceed the adjusted dollar limitation. The adjusted dollar limitation shall be the equivalent of two hundred thousand dollars beginning at age sixty-two.
(b) If the annuity starting date for the member's benefit is after he has reached age sixty-five, the defined benefit dollar limitation for the member's annuity starting date is the annual amount of a benefit payable in the form of a straight life annuity commencing at the member's annuity starting date that is the actuarial equivalent of the defined benefit dollar limitation adjusted for years of participation less than ten pursuant to Paragraph (4) of this Subsection.
(c) The interest rate and mortality table used for adjusting the maximum limitations above shall be:
(i) For benefits commencing before the member has reached age sixty-two and for forms of benefit other than straight life annuity, the member's benefit shall be the lesser of the benefit computed using an interest rate of five percent and the applicable mortality table and the benefit computed using the defined benefit dollar limit at age sixty-two, multiplied by the ratio of the annual amount of the immediately commencing straight life annuity to the annual amount of the straight life annuity commencing at age sixty-two, with both amounts determined without the limitations of this Section.
(ii) For benefits commencing after the member has reached age sixty-five, the member's benefit shall be the lesser of the benefit computed using an interest rate of five percent and the applicable mortality table and the benefit computed using the defined benefit dollar limit at age sixty-five, multiplied by the ratio of the annual amount of the immediately commencing straight life annuity to the annual amount of the straight life annuity commencing at age sixty-five, with both amounts determined without the limitations of this Section.
(iii) Notwithstanding the other requirements of this Subsection, no adjustment shall be made to the defined benefit dollar limitation to reflect the probability of a member's death between the annuity starting date and age sixty-two, or between age sixty-five and the annuity starting date, as applicable, if benefits are not forfeited upon the death of the member prior to the annuity starting date.
(4) If retirement benefits are payable under this system to a member who has less than ten years of participation in the system, the dollar limitation referred to in Paragraph (2) of this Subsection shall be multiplied by a fraction, not in excess of one, the numerator of which is the member's number of years of participation in the system and the denominator of which is ten.
(5) The two hundred thousand dollar limitation provided in this Subsection shall be adjusted annually to the maximum dollar limits allowable as determined by the commissioner of the Internal Revenue Service under 26 U.S.C. 415(d).
(6) If a member is also a member in another defined benefit pension plan maintained by the state or one of its political subdivisions, his benefit, considered in the aggregate after taking into account the benefits provided by all such retirement plans, shall not exceed the limits provided in this Subsection.
(7) That portion of the benefit that is attributable to member contributions shall be determined in accordance with Treasury Regulations §1.415(b)-1(b)(2)(iii).
(8) Notwithstanding the provisions of this Subsection, the benefits payable with respect to a participant under any defined benefit plan shall be deemed not to exceed the limitations of Subsection E of this Section if both of the following apply:
(a) The retirement benefits payable with respect to such participant under such plan and under all other defined benefit plans of the employer do not exceed ten thousand dollars for the plan year, or for any prior plan year.
(b) The employer has not at any time maintained a defined contribution plan in which the participant participated.
D.(1) For purposes of this Section and R.S. 11:1633 and 1634, average final compensation shall include any amounts properly considered as regular rate of pay of the member and unreduced by amounts excluded from income for federal income tax purposes by reason of 26 U.S.C. 125, 132(f), 402(e)(3), 402(h)(1)(B), 403(b), 414(h), or 457 or any other provision of federal law of similar effect.
(2) For years beginning on or after January 1, 2002, the annual compensation limitation shall not exceed two hundred thousand dollars, as adjusted for cost-of-living increases under 26 U.S.C. 401(a)(17)(B). If compensation for an earlier period is taken into account in determining an employee's benefits accruing in the current plan year, the compensation for the earlier period shall be subject to the compensation limit for the current year.
E.(1) The provisions of this Section shall apply if any member is covered or has ever been covered by another plan maintained by the employer, including a qualified plan, a welfare benefit fund as defined in 26 U.S.C. 419(e), or an individual medical account as defined in 26 U.S.C. 415(l)(2) that provides an annual addition as described in Paragraph (4) of this Subsection.
(2) If a member is or has ever been covered under more than one defined benefit plan maintained by the employer, the sum of the member's annual benefits from all such plans shall not exceed the maximum permissible benefit set forth in Subsection C of this Section.
(3) If the employer maintains or at any time maintained one or more qualified defined contribution plans covering any member in this system, a welfare benefit fund as defined in 26 U.S.C. 419(e), or an individual medical account as defined in 26 U.S.C. 415(l)(2), the member's annual additions for any year shall not exceed the maximum permissible amount, which is forty thousand dollars adjusted for increases in the cost of living pursuant to 26 U.S.C. 415(d).
(4) "Annual additions" of a member for the year shall mean the sum of the following amounts credited to a member's account for the year:
(a) Employer contributions.
(b) Employee contributions.
(c) Forfeitures.
(d) Amounts allocated to an individual medical account as defined in 26 U.S.C. 415(l)(2) that is a part of a pension or annuity plan maintained by the employer are treated as annual additions to a defined contribution plan. Additionally, amounts derived from contributions paid or accrued in taxable years ending after December 31, 1985, which are attributable to postretirement medical benefits allocated to the separated account of a key employee as defined in 26 U.S.C. 419A(d)(3) or under a welfare benefit fund as defined in 26 U.S.C. 419(e) maintained by the employer are treated as annual additions to a defined contribution plan.
(e) The employee contribution shall be deemed to be a defined contribution plan. If a member has made employee contributions pursuant to the provisions of this retirement system, the amount of such contributions shall be treated as an annual addition to a qualified defined contribution plan for purposes of this Section.
(5) The amount of annual additions that may be credited to the member's account for any limitation year shall not exceed the maximum permissible amount. Contributions and benefits under any other plan of the employer, to the extent that an adjustment is required to satisfy the requirements of this Section in the aggregate, shall be limited or reduced to the extent necessary to satisfy such requirements without reducing accrued benefits; however, only after such other plans have been modified shall the benefits and contributions under this plan be reduced. As soon as it is administratively feasible after the end of the limitation year, the maximum permissible amount for the limitation year shall be determined on the basis of the member's actual compensation for the limitation year. If there is an excess amount, the excess shall be disposed of as follows:
(a) Any nondeductible voluntary employee contribution to the extent it would reduce the excess amount shall be returned to the member.
(b) If after the application of Subparagraph (a) of this Paragraph an excess amount still exists, then any nondeductible mandatory contribution to the extent it would reduce the excess amount shall be returned to the member.
(c) If after the application of Subparagraph (b) of this Paragraph an excess amount still exists and the member is covered by the plan at the end of the limitation year, the excess amount in the member's account shall be used to reduce employer contributions, including any allocation of forfeitures, for such member in the next limitation year if necessary.
(d) If after the application of Subparagraph (c) of this Paragraph an excess amount still exists and the member is not covered by the plan at the end of the limitation year, the excess amount shall be held unallocated in a suspense account. The suspense account shall be applied to reduce the future employer contributions for all remaining members in the next limitation year and each succeeding limitation year if necessary.
(e) If a suspense account is in existence at any time during a limitation year pursuant to the provisions of this Section, it shall not participate in the allocation of the trust's investment gains and losses. If a suspense account is in existence at any time during a particular limitation year, all amounts in the suspense account shall be allocated and reallocated to members' accounts before any employer or any employee contributions may be made to the plan for that limitation year. Excess amounts shall not be distributed to members or former members.
(6) "Excess amounts" of a member for a limitation year shall mean the excess of the member's annual additions for the limitation year over the maximum permissible amount.
(7) The "limitation year" shall be the calendar year or the twelve consecutive month period determined by the board of trustees.
(8)(a) The "maximum permissible amount" for a member for a limitation year shall be the maximum annual addition that may be contributed or allocated to a member's account under the plan for any limitation year and shall not exceed the lesser of:
(i) Forty thousand dollars, as adjusted after 2001 for changes in the cost of living in accordance with 26 U.S.C. 415(d).
(ii) One hundred percent of the member's compensation for the limitation year.
(b) The compensation limitation provided for in Item (a)(ii) of this Paragraph shall not apply to any contribution for medical benefits within the meaning of 26 U.S.C. 401(h) or 419A(f)(2) that is otherwise treated as an annual addition pursuant to 26 U.S.C. 415(l) or 419A(d)(2).
F. The board of trustees may adopt provisions of the system that will carry out the requirements of Subsections C, D, and E of this Section, and the board of trustees may adopt provisions as required for the system to maintain its qualified status under 26 U.S.C. 401(a).
Acts 1990, No. 381, §1, eff. July 10, 1990; Acts 1991, No. 461, §1; Redesignated from R.S. 16:1044 by Acts 1991, No. 74, §§3, 5, eff. June 25, 1991; Acts 1993, No. 234, §1, eff. June 1, 1993; Acts 1997, No. 1052, §1; Acts 2012, No. 523, §1, eff. Jan. 1, 2013; Acts 2013, No. 220, §3, eff. June 11, 2013.
